Posts Tagged ‘agriculture financing for small holders.’

Berendina Micro Finance Institute Partners with NDB

Berendina Microfinance Institute (BMI), has initiated a new funding partnership with the National Development Bank recently. This has been the first borrowing which BMI had obtained from any commercial bank to finance its loan portfolio.

BMI initiated negotiations with the NDB in April 2012. During this period, NBD conducted an assessment study by visiting the BMI Head Office and having discussions with the Board of Directors and Senior Manages. BMI would be using this loan to finance the 4th cycle of business development loans, which include loans or new business ventures and enhancement of present business activities.

Chairman Dulan de Silva and Director Anura Atapattu endorsed the offer on behalf of BMI in July 2012 at the NDB head office. The loan amount Rs. 10 Million obtained under this facility with a repayment period of five years, in catered through a special loan scheme for small and medium enterprises.

BMI has started its operations in 2007, with the provision of credit services to the rural and plantation communities. During past 5 years, BMI has successfully obtained significant growth and client coverage in terms of depth and spread of outreach without drifting from the original mission of poverty reduction and providing prosperous living condition for the low income segment of the population. Currently, BMI implements its services in five districts, namely Anuradhapura, Kandy, Kegalle, Nuwara Eliya and Trincomalee, through its 17 branches.

BMI has made a strong impact on Microfinance activity by opening its branches in remote areas such as Serunuwera, Thambalgama and Kahatagasdigaya. It made significant progress on its borrowers and improving their businesses by providing training in business skills like marketing, account management, costing and also skills improvement trainings in a range of fields. BMI is the first MFI to provide loans to plantation workers through the plantation cooperatives managed by plantation companies. As of end July, 2012 there are 2095 clusters with 47,742 active borrowers and an outstanding loan portfolio of Rs. 954,417,532.

Enabling dialogues: Creating awareness about development

The Lanka Microfinance Practitioners’ Association (LMFPA) is pleased to announce the successful completion of a series of 15 discussion forums, titled Enabling Dialogue, which were held in different towns and cities in Sri Lanka over the course of a year.

The Lanka Micro Finance Practitioners’ Association (LMFPA), as the apex body of Microfinance Institutions (MFIs), in its bid to address and create awareness about development and the current status of the industry, including best practices commenced a series of Enabling Dialogues.

The purpose of the Enabling Dialogue programmes was to create awareness among microfinance practitioners in Sri Lanka on the current status of the local microfinance context, its challenges and how to address them effectively.

“Enabling dialogue sessions helped us in many ways, bringing current topics and issues to the table for interactive discussions, understanding the field level, especially the regional level, making stakeholders aware about potential opportunities and changes in the sector.

Further, it was a great opportunity for LMFPA to receive inputs from practitioners for upcoming publications by the LMFPA,” stated Imran Nafeer, Secretary of LMFPA.

Enabling dialogue programmes brought together stakeholders in the MF sector such as microfinance practitioners, technical service providers and facilitators to discuss a range of topics such as gender equality in microfinance, how to avoid over indebtedness, social performance management of MFIs, financial literacy and client protection principles, micro insurance and responsible financing.

These forums not only helped the participants gain greater insight into the status of the MF sector in Sri Lanka, share experiences and lessons learned; but also facilitated the establishment of strong relationships among the stakeholders.

Enabling dialogue programmes were previously conducted only in Colombo but then moved on to areas such as Kandy, Hambantota, Ratnapura, Batticaloa, Badulla and Jaffna. It was felt that these forums would better benefit the MFIs that are operating in the regional level. Five special Enabling dialogues were held in Jaffna alone because it is a newly emerging financial market.

“We felt that Enabling dialogue was a very productive tool for LMFPA in creating and establishing a conducive environment for the microfinance sector in Sri Lanka. We would like to continue similar programmes in the future, especially to make practitioners aware about the upcoming Microfinance Act,” said LMFPA President Channa Jayatilleke.

Barendina takes top notch

motivational training to rural

areas

Barendina Microfinance Institute (BMI) recently organized a Motivation and Business Victory Workshop for its microfinance clients.

This workshop was conducted by the popular Motivation, Mind Power and Leadership Training guru, Dr. Kuma Iddamallena. This training workshop was conducted at the Town Hall Auditorium of the Kegalle Municipal Council. More than 350 clients from Dehiowita, Bulathkohupitiya, Mawanella, Galigamuwa, Yatiyanthota and Ginigathhena branches of BMI actively participated in this workshop which was carried out as a full day programme on 15 November 2012.

Berendina Microfinance Institute (BMI), the leading microfinance service provider organized this workshop with the objective of changing its clients’ mentality from bad word attitude to positive hope and to start new businesses or developing their existing micro businesses. BMI expects successful businesses will eventually improve the living conditions of poor and make them more productive towards their personal development.

Commencing the workshop, the Chairman of the BMI Dulan De Silva stated that BMI organized workshop such as this to make sure that its clients get the same training and facilities to improve their skills which were enjoyed by the rich community in urban areas. He also stressed that it is not the intention of BMI to just give away micro credit to people but want to make it sure its clients make the facility useful and improve their skills, businesses and living conditions.

Commencing his workshop, Kuma Iddamallena narrated the story of Solchiro Honda, founder of the world famous Honda Motor Company Ltd., and how he failed on many attempts to establish his business but never gave up to rise to successful business.

He elaborated on how positive energy brings better results in life and the connection among dreams, action plans and successful implementation by setting one’s goals and targets. He asked the participants to write down their present obstacles and discussed with others to find practical solutions. By doing this, the participants were taught about the importance of paradigm shift along with setting targets for the next three years. Iddamallena emphasized the important factors when setting targets which are specific, measurable, attainable, relevant and time bound, which is called SMART module.

In the second session, Iddamallena focused more on the theme “Winning business.” He started with emphasizing the importance of effort, management plan and promotion and marketing and the necessary skills needed to oversee those aspects. He pointed out that successful businesses depend on quality of the product, service offered by the establishment and the speed of those services offered to clients. He explained how creative thinking, new techniques, dedication and hard work can make an existing business more successful than staying in the same level.

Differentiating traits and thinking

He elaborated to the participants the difference between the traits and thinking of successful people and people who are miserable in their lives. He proved changing ones’ personality traits can make a real difference in any business. He also encouraged participants to write down the learning points from their past mistakes and what solutions were identified to implement to overcome those hurdles. He concluded the session by teaching the participants how to formulate practical, productive and successful action plans for their existing businesses as well as for new businesses.

At the end of the workshop, the participants expressed their gratitude for BMI for organizing such a productive motivational programme, which really inspired them to look and work hard to make their businesses successful in the coming future. While thanking BMI, Ranatunga from Bulathkohupitiya said that with the knowledge he gained from the workshop, he would open his new grocery shop before December 2012 while continuing his profession as a mason.

Lasantha from Ruwanwella echoed the same spirit saying that she is leaving the venue with positive hopes and energy that she will restart the closed grocery business of hers once again and correct all her past mistakes to make her business successful in future.

Chamila Indunil from Mawanella thanked BMI for encouraging women like her to start into new ventures and said she is confident of becoming one of the successful businesswomen by putting into practice all the knowledge and skills gained from the workshop.

Utilising microfinance to full

capacity – Sri Lanka

By Rashika Fazali
A by-product of the Daya Group of Companies, Bimputh Finance PLC strongly follows in the footsteps of Nobel Prize Winner Professor Muhammad Yunus who developed the award winning concept of microfinance.

Bimputh Finance was established in the latter part of 2007 as a small operation. Since then, they have expanded their business to 13 branches spanning from Sevanagala, Ampara, Dehiattakandiya and to other eastern areas with a dedicated staff of 115. However, the three branches located in Jaffna, Panadura and Negombo mainly deal with microfinance.
Speaking to Bimputh Finance CEO and Director D.T. Kingsley Bernard, he stated that they believe in helping the low-income people with a motto that proves it: ‘the strength of the rural economy’.
Following are the excerpts from the interview:

Q: How did the idea to start a finance company come to be?
A: Our chairman Daya Gamage was confronted with a lot of difficulties in obtaining loans from banks. With that experience, in the initial stages of business, he has had an idea of setting up a financial institution which would give loans to small and medium entrepreneurs with less consideration at their collateral and repayment ability, going purely on the basis of whether these projects were viable and whether they could be retained.

Q: What kind of financial business does Bimputh Finance deal with?
A: Since we are a fully fledged financial institution, we are allowed to give loans, leases and take deposits. We have leasing and hire purchasing facilities as well as the authority to change foreign money. However, if you compare our institution with a bank, we cannot take current accounts. Other than the current accounts, we can maintain all the other aspects.

Q: Who is your clientele composed of?
A: Altogether we have a clientele of around 15,000 out of which 10,000 clients fall under the microfinance category. Not all 10,000 are given loans at the moment. There are a set of people who are in the waiting list.
We target the people who are not in a position to obtain loans from the bank. We have given loans to small and medium scale entrepreneurs especially in the eastern province, in the Sevanagala area and to the small farmers.

Q: How much is your loan portfolio?
A:We have a loan portfolio of about Rs. 650 million out which Rs. 150 million is allocated for microfinance.

Q: For whom is microfinance? And how does microfinance work?
A:Microfinance was introduced in Bangladesh for women who were willing to set up their own businesses – self-employment. It is a scientific program which is linked with peace because if you have money, you have peace.
But why women? They are more responsible than men. They run the family very well and when they take a loan they are under the obligation to repay it. In third world countries, 99% of activities are done by women.
These microfinance loans start at the level of Rs. 25,000 in the first year, Rs. 50,000 in the second year and Rs. 100,000 in the last year. After that they become small entrepreneurs.
In obtaining this loan, we don’t look at their collateral. We look at the person’s capability of repaying and whether she is worthy of getting a loan as we don’t give loans for consumptions like weddings, etc. Our need is for us to know where they live, about their husbands and the kind of self-employment project they will be involved in.
Our rapport with the micro entrepreneurs is quite close because we meet them every week. Our officers go to their houses and look at their business operations. These officers also go to the village, collect the people from the vicinity and advise them. The repayment for the loan is weekly as well.
At these weekly meetings, we also mark attendance which should be more than 65% for these people to get the second loans.

Q: Tell us about a few success stories.
A: There was one lady who started her business with a loan of Rs. 3,500 to make 50 string hoppers a day. Today, she makes 10,000 string hoppers a day with a net profit of Rs. 10,000 earning herself Rs. 300,000 per month. Her husband has also joined her and now delivers string hoppers with a three-wheeler.
There was another lady who sold illicit spirits, but wanted to change her life and business. Today, she’s doing a service to the country by selling only food.

Q: Has there ever been a failure in repayments?
A: There have been occasions. When it comes to microfinance, we have none. But in other loans, we have a non-repayment rate of 15% to 18%.

Q: What is different about Bimputh Finance?
A: Other than microfinance, we also have our own ATMs in Sevanagala, Ampara and Pepiliyana where we take the technology to the household.
Although we have the license, we are not into leasing very much. Yet, we try to concentrate leasing facilities for the small people like the three-wheeler drivers. Our main business strategy is to help the downtrodden people in the country while maintaining our business. We look for the low-income people because microfinance is for them.

Q: What are your future plans?
A: We are hoping to expand our microfinance operations to the rest of the branches. We are also planning to establish two new branches, one in Galle very soon and the other we haven’t decided as yet, and they will also deal with microfinance. In addition, we have plans to further develop all our branches.
We are also in the process of increasing our co-capital as per the requirement of the Central Bank where all finance companies have to increase their co-capital to Rs. 300 million. With this, we are hoping to increase our businesses in the areas where we see opportunities which will help the rural people.

According to the Coconut Research Institute in Sri Lanka, the coconut tree is perhaps the most valuable tree in the world. This magnificent tree grown in mostly tropical countries which mainly produces coconut is used in the production of 250 different useful consumers by products. However growing coconut trees as a mono crop is very uneconomical due to three main reasons:

There is a vital requirement of a specific land area per tree.

The requirement of an adequate moisture content of the soil.

Prevention of attacks from Insects and various diseases.

I am a veteran coconut grower on 40 acres in Bathuluoya, close to Mundal, in the Puttalam District who would like to share my experience with new ideas with similar cultivators, who are interested in this field.

When the land area is taken into consideration currently one acre of coconut is priced at approximately around Rs 100,000. With the optimum conditions, each tree produces close to only six coconuts per month and the reject rate is 7 %. The average farm gate price is around Rs.18 per coconut. The gross profit generated by one tree per year is x12x18 = Rs 1205.28. Even this 4.6% profit cannot be generated if the rainfall is not even during the year.

According to available data from 2003 to 2010 crops have been affected owing to variations in rainfall and the depth of the water table. Last year, the rainfall received in November was more than the total rainfall that was received in the previous 10 months.

The data also shows how the rainfall and the depth of the ground water drastically affects the coconut crop. This is the main reason why we are facing a severe coconut shortage after the middle of 2010. In the same manner we can predict a much worse shortage of coconuts in 2011 .

The methods adopted to increase the profitability of the land should be:

Irrigate the coconut trees when the ground water level drops below 6 feet from the surface. This applies to sandy soil otherwise it should be done at about 5 feet. The application of irrigation also depends on the height of the trees, as taller trees need more energy to draw water up to the crown, and should be done before the water levels drop below 6 feet.

Grow intercrops in between the coconut plantation.

Utilize available land for animal husbandry. To carry out the above operations, we must have the following resources and the infrastructure facilities:

Resources – human resources; proper soil type, a land which does not have soil erosion or compacted soil; and availability of sufficient water

4Infrastructure facilities – electricity; irrigation systems; farm equipment and machinery
In modern day farming, availability of electricity plays a pivotal role. Without irrigation and human resources it is impossible to run a farm in order to generate a substantial profit. As agriculture is an outdoor operation, to retain the human resources it is necessary to pay a good wage and to provide living standards.

That is by having a fairly comfortable house with electricity, as nowadays it is difficult to retain them in mud huts with cadjan roofs using kerosene lamps in the night for lighting purposes.
To increase profitability, it is necessary to have electrically-operated coconut husking machines and small scale coconut oil expeller machines. The government should encourage, academic staff and students in universities to develop such machinery. Intercropping, A case study of cashew cultivation.

Way forwardIrrigation and intercropping could increase the profitability of the land. In this regard human resource, farm machinery, water and electricity are the key factors. Except electricity, other three resources could be obtained by the cultivator, but it is the government’s obligation to supply electricity.

At a distance (from where my estate is) I can observe the high tension electrical cables leading from the Norochcholai coal powered electricity plant. Though the politicians boast that by the year 2012 the whole country would be supplied with electricity, so far no plans have been drawn towards supplying and distributing the required power in our areas. Supplying power to households give an indirect investment as they consume power, but giving power to these agricultural lands would no doubt enhance productivity which is very valuable and would be a direct investment, profitable to the country.

Of the three main agricultural exports, when the prices of tea and rubber rise, all politicians are happy and praise the relevant cultivators. In contrast in the case of coconut they always blame the cultivator. This is because a majority of these politicians are not versed and conversant with the subject of coconut cultivation allowing their henchmen who do not have the basic knowledge of coconut cultivations to import palm oil to control the local market price of coconut.

As facts are stubborn and very obvious, if the cultivators do not get the desired benefits, by the related authorities, the writer in the future firmly intends to cultivate cashew trees and other fruit bearing trees in the vacant spaces which will be created by dead and the unproductive coconut trees in order to cover losses, instead of considering replanting! (The writer is a coconut grower)

Coconut industry praises Govt. for subsidy offer

By Quintus Perera

The crisis facing coconut with prices going up is due to poor yields owing to less application of fertilizer, according to coconut growers. Quoting a Central Bank report, Anton N Fernando, President, Coconut Growers Association of Sri Lanka (CGASL) told Business Times that 25,000 tons of fertilizer in 2008 was used in coconut lands and in 2009 the quantity has dropped to a meagre 17,000 tons. Thus the 2008 crop of 2,909 million nuts dropped to 2762 million nuts in 2009, a drop of 147 million nuts.

This was indicated by Mr Fernando, subsequent to a press briefing on Friday held to thank the government for implementing a Coconut Fertilizer Subsidy scheme of issuing a bag of 50 kg at only Rs 1,000 which would cost around Rs 3,000 in the open market.

He said that their association has persistently urged the government to implement a fertilizer subsidy to avert the impending coconut crisis and said that it is good that the government has at last heeded their warnings to allow the subsidy.

Mr Fernando said that in 2006 growers applied 36,000 tons of fertilizer and thereafter it was a steep drop resulting in lower production. Unnlike other cash crops like tea and rubber, around 75% of the coconut production is used for domestic consumption and thereby the industry cannot benefit from international prices. He said that there are more or less one million acres under coconut cultivation and if they are properly fertilized, they could achieve a jumbo crop of 3500 million nuts. But he said that it would take a few years because the fertilizer effect would take around three to four years.

He urged coconut growers to make use of the fertilizer subsidy to the full and also said that the number of palms per acre should be more than 50 trees and only then could this be put to optimum use. Another way to address this issue Mr Fernando said is to grow coconut trees for individual family consumption in their own compounds. He said that the Coconut Research Institute has now introduced a dwarf coconut plant that could be grown in small spaces of land. He said that though he did not have exact statistics, growing dwarf coconut trees are getting popular.

He said that they are not in favour of importing coconut as they might bring in diseases and any other substitute as they would jeopardize the price of local coconuts.

Sri Lanka is opening a rice flour factory with a loan from a state bank re-financed by the central bank, the monetary authority said.

The central bank said the monetary “in association with several key stakeholders and two state banks, is currently promoting rice based industries in the country with a view to utilize excess rice to produce value added agro based products.”

“As estimated by the Department of Agriculture, the paddy production in the country will increase substantially once paddy lands in the Northern and Eastern provinces are cultivated totally,” the Central Bank said in a statement.

“Hence, the excess rice production needs to be diverted to produce other value added rice based products in order to maintain market stability with a remunerative price for the farmers in the regions.”

Sri Lankan farmer cannot produce international grade rice that can be readily exported and rulers have to find way to force people to eat the produce.

Sri Lanka’s rice is already among the most expensive in the world and prices spike above the so-called ‘food crisis’ levels of 2008, prompting the ad hoc freeing of trade to ensure food security of the poor.

The latest consumption data also shows that consumption of ‘nadu’ the lowest quality rice has increased while the consumption of better quality red rice and ‘samba’ has fallen.

Already carbohydrates such as wheat and potatoes are taxed at high levels by the state to block the access of the poor to non-rice alternatives.

Critics have pointed out that Food liberties is one of the key freedoms lost to the people after gaining ‘independence’ from colonial rule. A government minister recently called wheat consumers terrorists.

The rice autarkists have also attempted to restrict the food liberties of sick patients in hospitals. Sri Lanka has had three armed uprisings against the state since independence from colonial rule.

The central bank said it had granted refinance loans to two state banks to set up two rice flour factories using ‘state of the art milling technology” to make rice flour with a particle size of less than 120 microns.

The Central Bank said the size is ideal for producing “confectionary and bakery products including bread.”

“Since micron size particles are very much tiny, according to the industrialists, bakers can make bread mixing up to a maximum of 80 percent rice flour with 20 percent wheat flour.” – (LBO)

The Central Bank of Sri Lanka (CBSL) under its Viskam Loan Scheme has facilitated to set up the first rice flour factory with latest state-of-the-art milling technology in Sri Lanka.

The CBSL, in association with several key stakeholders and two state banks, is currently promoting rice based industries in the country with a view to utilise excess rice to produce value added agro based products.

As estimated by the Department of Agriculture, the paddy production in the country will increase substantially once paddy lands in the Northern and Eastern Provinces are cultivated totally. Hence, the excess rice production needs to be diverted to produce other value added rice based products in order to maintain market stability with a remunerative price for the farmers in the regions. Since it is believed that rice based products are healthier than wheat flour based products, establishment of rice flour industries would bring multiple benefits for the country.

Accordingly, under the Viskam Loan Scheme, the CBSL has granted refinance loans to two state banks to set up two such factories using latest state-of-the-art milling technology to produce rice flour that contains particles with less than 120 micron in size which is ideal for production of confectionary and bakery products including bread.

Since micron size particles are very much tiny, according to the industrialists, bakers can make bread mixing up to a maximum of 80% rice flour with 20% wheat flour.
Ajith Nivard Cabraal, Governor, Central Bank of Sri Lanka was the chief guest at the opening ceremony at Veyangoda yesterday.

The first Rice flour industry of this nature will commence operations at Veyangoda where the industry is located and the opening ceremony is scheduled to be conducted as follows:

The Bank of Ceylon has financed this project with refinance facility available from CBSL under Viskam loan scheme. CBSL expects to promote 25 such industries in other parts of the country. The product has been branded as Healthy Fla by Bandara Industrial Services (Pvt) Ltd., Veyangoda.

Hatton National Bank Marketing and Retail Banking Deputy General Manager Chandula Abeywickrema has been invited by World Bank’s Agrifin team to share his experience and expertise at their quarterly seminar, which would be held on January 24, at the World Bank office in Washington DC.

Chandula Abeywickrema

The World Bank Agrifin team organizes the quarterly seminar as part of the knowledge management program of Agrifin to showcase the lessons learnt and to understand the state-of-the-art practices for agriculture financing for small holders.

Chandula, who is an expert in the financial inclusion, specially focusing on microfinance and small holder agriculture financing is the Banking With The Poor Network (BWTP) Chairman an international body representing the largest network of microfinance practitioners and networks in Asia and very much recognized in Asia for his expertise in the field of microfinance and agriculture finance and financial inclusion.

Chandula will showcase in his presentation the state of the small holder agriculture finance activities in Sri Lanka and the key role played by HNB in designing products, services, distribution, outreach, risk management, and technology employed.

HNB has been involved in agriculture financing from the very inception of the bank and in the last two decades, has been very aggressive in creating access to financial services for small holder agriculture financing through HNB’s “Gami Pubuduwa.” HNB’s world acclaimed Gami Pubuduwa microfinance program, which focus on greater financial inclusion, particularly in the rural areas have successfully created many models and programs and also has created key partnerships and linkages for sustainable and commercially viable agriculture development right across the country through its network of 205 Branches throughout the country.

With the conclusion of the ethnic war and when Sri Lanka is at the threshold of greater economic development, the Government is greatly focussing on rural and agriculture development and taking the economic development to more people in more places.

It will be an ideal opportunity and time for an expert like Chandula with great exposure in Asia not only to showcase HNB’s involvement in small holder agriculture financing, which has created a significant agriculture development in many parts of the country through its branch network but also to showcase the potential the country holds in small holder agriculture financing and draw the attention of the international agencies.